Source: The Motley Fool
The following was posting on The Motley Fool:
Thanks to a bunch of musclebound guys and a meek 15-year-old girl, Jakks reported a 20% increase in revenue and a 48% surge in profits compared to last year’s fourth quarter. The licenses it holds for World Wrestling Entertainment (NYSE: WWE) and Hannah Montana — the pop singer/actress/wondergirl sensation of Disney (NYSE: DIS) — were the drivers of growth this year, and they seem to be keeping JAKKS in play.
Like Hasbro (NYSE: HAS), JAKKS hasn’t suffered from any toy recalls because of lead paint, or any of the other miseries that mired toymakers last summer. However, its WWE license has been jacked away, since the two have been battling it out in court over royalty payments. While the federal lawsuit has been dismissed, the wrestlers have sucker-punched JAKKS and given the license to Mattel (NYSE: MAT) instead. This may pose a hurdle for JAKKS, but it won’t be arriving anytime soon. The current contract runs through 2009, and JAKKS will be able to sell off product through 2010. That’s three more years of putting more profits in a headlock.
JAKKS won’t be bereft of any wrestling goons once the WWE leaves the ring, however. The toymaker signed up the WWE’s much smaller, privately held rival, TNA, which will launch just as the WWE deal ends. Sure, the outsized personalities in the wresting world have built up the “sport” over the years, but JAKKS’ strength in the action-figure wresting-toy line certainly has helped revitalize pro wresting. I’d say Mattel’s getting a gift of JAKKS’ years of marketing here, but I wouldn’t underestimate JAKKS’ ability to help TNA grow.
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